6 Egregious Habits of IT Company CEOs

When I got my first job in the IT industry at HP way back when, the enlightened management style that I encountered was a revelation. I had worked early in my career at large, “old-school” industrial companies where “top down”, authoritarian management approaches (and other practices much worse) were still the norm. The management style of the average American company (IT, industrial or other) today has generally progressed positively as society has itself. But even today, even in the generally progressive IT business, I still see Tech CEO management practices that make me shake my head.

I’ve compiled a list of a few things that I witness software & hardware company CEOs doing – which they really should stop doing. Tech CEOs, you know who you are! Let’s take a look at the list:

Manage on a Strictly Financial Basis

I see this phenomenon frequently, often and not surprisingly from tech CEOs that come from a strictly financial background, but also sometimes by those who don’t have direct, front-line experience in the type of business that they are charged with running. In truth, in many cases this is the only basis which these individuals can manage the business, due to lacking in key experience and expertise. But it almost never works well in the IT business, as it is very difficult to adequately quantify the creativity required to succeed in the development and marketing of new technology products. Please don’t misunderstand; there definitely is an important financial component to managing a technology-based business. In fact, there are many IT companies that fail due to a lack of budgetary controls by a financially unsophisticated tech CEO, often from those CEOs that come from the technology side of the business.

Tech CEO Too Focused on the “Shiny New Toy”

Another interesting phenomenon I run across is the tech CEO with a VERY short attention span. New things are good, older things are bad – or at least ignored. This can mean a singular focus on new employees, products, technologies, markets, M&A deals, factories, etc. Doesn’t matter what it is, they get excited about what’s coming down the pike or just around the corner. While it’s natural to get excited about new things that hold promise to positively impact the business, it can also lead to a lack of attention on core (and often boring) existing functions and staff. This can cause real problems when important parts of the business are given short shrift, while the latest “shiny new object” is lavished with resources and attention.

Treat People the Same as Office Furniture

You often see this mentality coupled with the overly financially-focused CEO. Everything on the balance sheet is seen as an asset that is ultimately disposable – without consequences. Unfortunately, staff is sometimes treated in the same manner with this approach. Hire them on when needed, discard them when there is an excess, or when they are seen as past their useful life. This works fine with desk chairs. When applied to Doris in accounting, it not only has tragic human consequences for the affected staff, but it takes a terrible toll on the company culture as well. When employees are not treated with the respect that humans deserve everyone in the company is negatively affected, even those who aren’t let go. Morale suffers, reducing productivity. Loyalty to the company is diminished, leading to reduced tenure and increased turnover. This can create institutional knowledge gaps as well as increased recruiting and training costs, all of which reduce overall productivity. These are “soft, indirect costs” which are harder to measure than direct costs, but very real and potentially large.

Top-Down, Non-Participative Decision-Making

This is the old school management style that I referred to in the introductory paragraph of this article. Sadly, it’s not extinct even as we sit here in 2017. It will never go away, as it’s often practiced by a personality type that is not uncommon among high performers. This management style can work – as long as it’s not accompanied by too many of the other items on this list! While imo it’s not an optimal approach for managing a tech company, it does have some strengths such as consistency and potentially enhanced execution speed. And even in more enlightened management approaches, sometimes the decision just needs to be driven from the top. But my advice to any tech CEO is to use this approach sparingly and with great care.

Tone Deaf and Dismissive of Criticism

This is a big one and probably the item that is most corrosive on a company’s culture and performance. In 2017 employees want to be heard. Even if the management style is top down, a tech CEO can still solicit input and listen respectfully to complaints and ideas for improvement. I always say “bring solution, not just problems” to folks reporting to me. But in truth, to be seen as an effective leader it’s very important to be seen as an individual capable of listening to criticism on how the company is operating – even if it feels PERSONAL. Human nature makes that very hard to do for many. But that’s why the CEO is paid the big bucks. Ignoring input or dismissing it lightly will cause important information that you need to do your job to no longer reach you. When this occurs, it’s easy to become isolated from reality. Once you’ve become an “Emperor Without Clothes” due to employees afraid to deliver you bad news, things don’t look good for your personal performance or your company’s prospects.

Breed a Fear of Failure and Stifle Innovation

There is actually something worse that being tone deaf and dismissive of complaints and other input. It’s when you see a tech CEO PROACTIVELY create an environment where any mistake – no matter how well intended – is punished with impunity. In software, SaaS and hardware businesses in particular, innovation is usually a huge key for marketplace success. So the CEO who is so focused on limiting mistakes that he quickly punishes every misstep to prevent a reoccurrence is inadvertently “cutting off his nose to spite his face”. An IT CEO needs to walk a delicate balance. Obviously, management needs to create controls which limit huge mistakes that can have huge negative impacts on the business. And if an employee takes stupid, excessive risk they shouldn’t be rewarded and probably punished. But if you want that important innovation to occur, it’s critical to allow people to take acceptable risks and make reasonable mistakes in the course of attempting to make something positive happen for the business. Once you create an environment that won’t allow this, the innovation pipeline will dry up. This is often the beginning of the end for a tech business.

So there’s my list of management practice no-no’s for software and hardware company CEOs. I’m sure you can add to the list -so please do! Post a comment below to add to the list.

About Phil Morettini

Phil Morettini is the author of the Morettini on Management Tech Blog and President of PJM Consulting. Mr. Morettini has an extensive C-level software and hardware company executive background. PJM Consulting provides management consulting and interim management services to technology companies.